Africa’s foremost e-commerce company, Jumia says it will pull out Jumia Food, its food delivery business in Africa by the end of 2023, a measure targeted at cutting cost.
Countries to be affected include, Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
The unprofitable e-commerce company, which lost $19 million in Q3 2023, has changed its strategic focus and doubled down on its ambition to reach profitability since it named Francis Dufay as CEO last year.
Dufay told Reuters that the food delivery segment has challenging unit economics and big losses.
He also blamed the closure of Jumia Food increasing competition and cost of operations.
“There is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.”
He also described the segment as not offering the same “upside potential” as the company’s physical goods business.
“Our priorities need to change,” Dufay told TechCabal in September.
Since then, Jumia has laid off 900, or 20%, of its employees and moved 60% of its top management team from the United Arab Emirates to the respective African countries to save costs.
It has also drastically cut its advertising and marketing spend.
Closing Jumia Food, an unprofitable business segment since its launch in 2013, is another push to focus on business segments that can drive profitability.
While Jumia began focusing on small-ticket everyday items in 2021, Dufay has changed that, and he has also begun a push into smaller Nigerian cities.